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By KATY MCLAUGHLIN

Chef and restaurateur David Burke’s business sounds like a financial-crisis perfect storm. Consider:

His restaurants are mainly in hard-hit areas including Manhattan’s Upper East Side and Las Vegas. Mr. Burke has no experience owning restaurants in a down economy; he launched his empire during restaurant boom times, starting in 2003. And the $7 billion fine-dining industry will see a 12% to 15% drop in sales this year, according to Technomic, a Chicago restaurant industry consultant.

And yet…Mr. Burke reports overall growth, some of his restaurants are booked to capacity on some evenings, and restaurant-industry analysts say he is one of the few high-end players with the right idea for the times.

How could this be? Mr. Burke, it seems, has figured out a way to navigate the downturn. His strategy is to throw out the high-end-dining playbook that says discounting should be subtle. Instead, he is offering dramatic, attention-getting and significant discounts. By engineering the menu carefully and keeping labor costs in check, he is able to slash prices without losing money, he says.

His promotions have included $20.09 three-course meals with items such as oysters and lobster at many of his upscale restaurants, including two in Manhattan (where, without discounts, entrees run $29 to $44), and $5 burgers and milkshakes at his Chicago steakhouse (where a 14-ounce sirloin is $48 on the regular menu). On one menu, he crossed out prices of wine and listed new prices with the term “sale” — a rarely seen word in fancy restaurants.

TRY IT! David Burke’s promotions include a wine auction and $20.09 three-course meals

One of his most unusual promotions is the Wine Auction at the tony David Burke Townhouse in Manhattan. Diners are handed a list of high-end wines with prices ranging from $200 to $600 struck out with red ink. The sommelier approaches the table, suggests that diners make him an offer and begins a negotiation. Wine director Bruce Yung says he sells an average of five bottles a night, meeting his reserve price or better.

“It’s worth a shot,” says Mr. Burke of his unorthodox approach to selling fine wine. “I’m sitting on close to $200,000 worth of wine anyway, already paid for.”

The D Word

Discounting is a strategy high-end restaurateurs have traditionally avoided or carried out in subtle ways, out of fear of eroding the cache of their brands. But this winter and spring, an unprecedented number of fine-dining restaurants slashed their prices.

Mr. Burke tries to set his restaurants apart from other bargains being offered mainly by making his discounts as drastic, easy-to-grasp and catchy as those of one of the few restaurants doing well these days: McDonald’s.

“I have teenage kids who go to McDonald’s for a dollar meal,” Mr. Burke says. The snappy ring to that promotion inspired him to come up with a high-end equivalent. “I see that it’s working for them at a buck, so it might work for me at $20,” Mr. Burke says.

 

Wooing Diners in a Down Economy

2:07

Chef David Burke is known for his creative cuisine. Now he’s using that same creative approach to weather a downturn in dining out. He talks with WSJ’s Beckey Bright about his strategy.

Starting in January, he rolled out $20.09 meals on Sunday nights at David Burke Townhouse and Fishtail in Manhattan, and at David Burke Fromagerie in Rumson, N.J. At Primehouse, in Chicago, he offers the $20.09 deal for lunch six days a week, excluding Sunday. At David Burke at Bloomingdale’s, in Manhattan, he serves a $20.09 dinner every night of the week. For a $5 supplement, diners can have a one-pound lobster or filet mignon entrée.

Last year, DB Global, Mr. Burke’s New York-based company, had $35 million in revenue, and for this year he predicts $45 million. Like many multi-unit operators, he reports that his less-expensive restaurants are doing well this year. For instance, David Burke at Bloomingdale’s, which has both a sit-down restaurant and a Burke in the Box take-out area, is up 2% over last year. Sales at all three Burke in the Box restaurants — the others are at McCarran International Airport in Las Vegas, and Foxwoods Resort Casino in Connecticut — are up from last year.

Still, even his high-end restaurants, while taking a hit, are doing better than many of their high-end competitors: Primehouse had a 2% decline in sales in the last quarter of 2008 and beginning of this year, compared with the prior year; Fromagerie is down 5%, and David Burke Townhouse in New York City saw an 8% sales drop. Across Manhattan, meanwhile, fine-dining operators are reporting sales declines of around 15%, and some celebrated restaurants, including Fiamma, a highly praised Italian eatery in the same price range as Mr. Burke’s fanciest restaurants, recently closed.

Some of the impact of Mr. Burke’s discounting is measurable: The Sunday discount dinner at Townhouse in Manhattan turned a night that typically grossed $5,250 into a $12,750 night, Mr. Burke says. There are softer benefits, too, such as increased goodwill, publicity, and customers who discover the restaurants and return on full-price nights, Mr. Burke says.

Internal Breeding

Mr. Burke is somewhat insulated from the risk of besmirching his high-end image with discounts because of his unique public persona, says Ed Levine, founder of the food blog SeriousEats.com. “David Burke is the master of the culinary grand gesture, so this is perfectly in keeping with his brand,” Mr. Levine says. Mr. Burke now has “pricing gimmicks” that link up with other gimmicks he’s used over the years, Mr. Levine says. Mr. Burke, for example, bought his own breeding bull to sire the beef cattle used at Primehouse. He also lines his beef-aging cave with Himalayan rock salt, which he sells for $29.99 for a two-pound box.

Discounting, if done too often for too long by too many players, can erode pricing power in the long term, says Dennis Lombardi, executive vice president of WD Partners, a restaurant and retail consultant in Dublin, Ohio. Citing one example, “customers have been trained to expect to buy pizza at a discount,” because of all the coupons and deals, Mr. Lombardi says.

Mr. Burke says that by limiting most of his discounts to Sunday and varying the deals, he avoids such expectations.

Less Bass

With careful planning, Mr. Burke says he is able to keep food costs on his discounted menus at about 45% of the menu price, which is higher than the traditional 35% most fine-dining restaurants aim for but still enables him to earn a profit, because people tend to order more drinks when they are paying less for food. He sprinkles in luxurious ingredients, though some, such as dry-aged beef or black bass, are served in smaller portions than on the a la carte menu. He caught a break this winter when the wholesale prices he was paying for lobster fell to about $5 a pound, from a norm of $7.50, enabling him to include on the discounted menu items such as lobster carbonara and half an “angry lobster,” a spicy signature dish.

Stephen Hanson, a New York-based restaurateur who manages operations for the Chicago hotel where Primehouse is located and who helped devise the concept for the restaurant, disagrees with the discounting approach. Mr. Hanson says he fears that the customer will think, “Were you gouging me beforehand?” But Mr. Hanson, whose company, New York-based B.R. Guest Restaurants, owns 14 other restaurants in New York and Las Vegas, says he is content to let Mr. Burke, whom he calls “a marketing genius,” decide the menu pricing.

During a weeklong promotion in October at Primehouse in which Mr. Burke sold normally $12 burgers for $5, the restaurant made money, Mr. Burke says. Serving lunch to 30 to 40 people on an ordinary day yields about $8,000 per week. During the promotion, the restaurant served 300 lunches a day, Mr. Burke says, for a weekly lunch take of $30,000. While food costs were higher, because more was served, labor costs stayed almost the same, because waiters at the restaurant make most of their wages through tips and the kitchen required only two extra line cooks, who make $15 an hour, he says.

In addition to discounting, DB Global is reducing labor costs. Every week the company analyzes how many bookings have been made at each restaurant and looks at past history to determine how busy it will be. Then it pares or increases hourly staff — about 70% of all employees — accordingly. In winter, about a dozen cooks usually return to their home countries, including Mexico, India and France, for six weeks of unpaid vacation; this year, Mr. Burke encouraged them to take two or three months off. Because his three Manhattan restaurants are in close proximity, he also moves staff from less-busy to fuller restaurants and asks them to multitask. For example, the company butcher now also makes ravioli and crab cakes.

DB Global also focuses on retaining every potential customer. On a recent Tuesday, Fishtail was too full to accommodate more patrons. Mr. Burke instructed the Fishtail hostess to send patrons to nearby David Burke Townhouse, promising a free drink would be waiting. Out of 20 potential guests, 18 took the offer, Mr. Burke says.

—Ms. McLaughlin is a staff reporter for The Wall Street Journal in Los Angeles.

Write to Katy McLaughlin at katy.mclaughlin@wsj.com

Printed in The Wall Street Journal, page R3

By JENNIFER CORBETT DOOREN

A federal advisory panel overwhelmingly backed the weight-loss drug Qnexa, clearing the way for the Food and Drug Administration to potentially approve a prescription diet drug for the first time in more than a decade.

The vote raised fresh hopes that drug makers have finally found a pill to help the millions of Americans who struggle to shed pounds. With two-thirds of Americans considered overweight or obese, the market could be worth billions.

Qnexa, which is made by a small California firm called Vivus Inc., and two other weight-loss drugs were rejected by the FDA in the past two years on concerns about potential safety risks. But on Wednesday, a panel of non-FDA medical experts reviewed additional clinical data that convinced panelists the drug’s benefits outweigh any dangers.

The panel’s 20-2 vote amounts to a recommendation that the FDA approve the drug for sale. The agency usually follows the advice of its panels but isn’t required to. The FDA is expected to make a final decision by April 17.

The development of obesity compounds has been a tough area for companies since the fen-phen drug combination was taken off the U.S. market in 1997, after one of the medication’s components was linked to heart-valve damage.Abbott Laboratories removed its weight-loss drug Meridia from the U.S. market in 2010 amid concerns about the drug’s risk of side effects like heart attack and stroke.Roche Holding AG’s Xenical is the only long-term prescription weight-loss drug on the market, though it hasn’t gained wide usage partly because of gastrointestinal side effects..

Several panel members said they were impressed with the magnitude of the weight loss seen with Qnexa. They said plans by the company to conduct long-term safety studies on potential heart risks and sell the drug through a limited number of mail-order pharmacies swayed them in favor of supporting the drug despite limited safety data.

Qnexa is a controlled-release formulation that combines low doses of two older generic drugs: the stimulant phentermine, which cuts appetite, and topiramate, which increases the sense of feeling full. Topiramate is also sold under the brand name Topamax by Johnson & Johnson to treat migraines and seizures.

Some doctors are already using the combination of the drugs to treat obesity, which is why some FDA panel members said it was important to get Qnexa on the market so that patients have appropriate benefit and risk information.

Qnexa would be targeted at adults who are considered obese or who are overweight and have another weight-related condition like high blood pressure, type 2 diabetes, or high cholesterol. Patients have lost about 10% of their bodyweight on average from the drug.The pill would be given once daily.

Still, FDA approval of Qnexa isn’t guaranteed. In 2010, a similar FDA panel voted 13-7 to support Orexigen Therapeutics Inc.’s Contrave, but the agency went against its panel’s advice and asked the company to conduct a long-term cardiovascular outcomes trial before the FDA would again consider the drug. Orexigen has said the study will likely start later this year.

Qnexa was invented by Dr. Thomas Najarian in 2003, then a full-time scientist at Vivus who remains at the company part-time. The company, based in Mountain View, Calif., also developed an erectile-dysfunction treatment but doesn’t yet have meaningful revenue.

“We are certainly optimistic,” Peter Tam, Vivus’ president, said of the chance of having Qnexa approved. “This is a big step for us.” Vivus wouldn’t comment on how much Qnexa could cost if it hit the market.

Vivus shares, halted during the market’s regular session Wednesday as the FDA panel met, reopened during after-hours trading and jumped 87% to $19.79. Shares of other obesity-drug makers also surged in after-hours trading following the panel’s backing. Arena Pharmaceuticals Inc. added 14% to $2.07, while Orexigen gained 15% to $3.69, after rising 5.6% during the regular session.

In addition to Qnexa, the FDA is again reviewing Arena’s lorcaserin. That drug will also face an FDA panel before a June agency decision.

When FDA rejected Qnexa in 2010, the agency asked Vivus for two-year clinical data clinical data rather than the one year’s worth of data that was available then. At the time the FDA said the drug resulted in “significant” weight loss but the agency said it was concerned about a possible risk of birth defects and an unknown impact on the heart.

Clinical studies showed Qnexa led to an increased heart rate in some patients but it also reduced blood pressure, making the long-term effects on the heart unclear.

Other studies of the topiramate in Qnexa have suggested an increased birth-defect risk. The FDA said exposure to topiramate in pregnancy “is likely to be associated with a two- to fivefold increased prevalence of oral clefts,” a defect of the mouth that can be later treated with surgery. Vivus has proposed a program to educate women of childbearing age about the risk of Qnexa and the need to use birth control while taking it.

Write to Jennifer Corbett Dooren at jennifer.corbett-dooren@dowjones.com

By PAWAN MUNJAL

I set out to write this article on a late-winter Sunday, with my television on mute mode. However, I keep finding it difficult to keep my attention away from the TV screen, as iconic Indian cricketer Sachin Tendulkar tears apart a hapless New Zealand attack in Christchurch to score an unbeaten 163 to lead India to a massive total against the hosts in the third One Day International. With the Indian innings over, I try to concentrate on the article.

Pawan Munjal

Moments later, my writing hits a roadblock again, as another sports channel brings live images of Indian golfer Jyoti Randhawa firing a five-under 65 to clinch the Thailand Open for his eighth Asian Tour victory.

My writing was to be interrupted yet again during the course of the day, as I watched with pride the youngest member of the Indian Davis Cup team, Somdev Devvarman, ranked 150 in the world, beat world no. 59 Lu Yen-Hsun in straight sets to take India into the third round of the Davis Cup.

These victories for Indian sports in far corners of the world come on top of the Oscar wins and the Man Booker prize for Indians. These are exciting times to be an Indian; and to be in India.

It’s also a time for what people refer to as the “other India” — rural India – to emerge. The central government is pumping in funds to these areas for employment generation and infrastructure development. A key part of the rural population’s ability to reach its new aspirations involves two-wheelers — motorized ones and good old bicycles. Any discussion, however, on the two-wheeler industry today is usually punctuated by references to the imminent arrival of the so called “low-cost” cars which are perceived to pose a threat to two-wheelers.

“It is the two-wheeler industry that will pry open consumer aspirations”

So is the low-cost car really a threat to the existence of two-wheelers? My answer is an emphatic no; two-wheelers are undoubtedly going to remain the dominant segment in India. I share the reasons for my confidence below:

India on an average sells approximately seven million motorcycles and scooters every year compared to about 1.5 million passenger vehicles, making it the second biggest two-wheeler market in the world, behind China. And still, according to the latest estimates, only 23% of urban households and less than 10% of rural households own a two-wheeler. These penetration levels are only a fraction of the levels in other developing Southeast Asian Countries. The penetration of two-wheelers in Indonesia is three times that in India. In Thailand and Malaysia, it is more than six times.

There are more than seven million new bicycle users every year in India, and most of them aspire to upgrade to two-wheelers. The growing aspirations, expanding road networks and growth of satellite townships are factors further spurring two-wheeler demand.

In the long run, it is the two-wheeler which will continue to remain the vehicle of choice in India — and the bulwark of consumer aspiration. The Indian consumer is highly price-conscious and assigns importance to factors such as acquisition costs (cost of ownership of two-wheelers is about one-third of an entry-level small car), higher fuel cost, higher maintenance cost and higher sundry charges including registration, insurance, parking, toll taxes etc. For the customer, fuel efficiency of the vehicle continues to be a significant ‘influencer’ in his purchase decision.

India today is a young nation with a large percentage of its population below 35 years of age. The demographics are going to be further skewed in favor of the young over the next 15 years. Thanks to the boom in media and satellite TV, Indian youngsters are today exposed to global lifestyles, and in the process they have broadened their horizons. For youngsters, bikes are a style statement and not just a mode of transport. The two-wheeler industry is therefore likely to see further growth as more and more youngsters give expression to their lifestyle aspirations.

Women are also going to play a pivotal role in further driving the growth of the two-wheeler industry. With more women working and public transportation not being able to meet the demands of the growing population, the two-wheeler will emerge as a convenient mode of transportation for many of them. We at Hero Honda are selling about 12,000 units of our women-focused scooter Pleasure every month, and these numbers continue to swell at a fast pace.

The debate on two-wheelers versus low-cost cars has perhaps become more intense in view of the recent slowdown in the domestic two-wheeler industry. Let me address this issue too. The slowdown in our industry has primarily been on account of the high interest rates and an overall credit squeeze. That has taken a toll, for sure. But, on the brighter side, Hero Honda sales are far outpacing the industry average. In the month of February alone, our growth was an encouraging 24%.

I see two-wheelers permeating the remotest villages of India, I see women going to work on scooters, I see more satellite towns developing as people travel on their bikes for work, I see small business men and traders conducting their businesses using their bikes as the medium, and in all this I see the vision of a dynamic, mobile and a well-connected India.

It is the two-wheeler industry that will pry open consumer aspirations and build a base for low-cost cars if at all; but not without the ever-burgeoning market that two-wheelers will always create and sustain. The story of the two-wheeler industry in India is not about market share yet…it is about market creation.

—Mr. Munjal is mananging director and chief executive of Hero Honda Motors Ltd.

By RICHARD B. WOODWARD

Boston

A superb movie involves us so convincingly in an illusory world that the more prosaic one never enters our thoughts. The dream factories of Hollywood build stories that offer a brief escape from everyday cares. Once we start looking at our watches rather than the images on the screen, the spell is broken. The director no longer has our undivided attention.

In his profoundly captivating video work “The Clock,” Christian Marclay wants us to see and hear the relentless tick-tock going on within the eidetic space of the movies. The thousands of shots he has spliced together from the history of cinema depict little else but scenes of characters checking the time, fretting about it, or surrounded by bell towers or digital clock radios that ground the action on the screen within the cycle of a fictive day and night.

The result is a functional collage that is figuratively and literally a timepiece. All the images and sounds that the artist (and his six assistants) have scavenged from the archives of world cinema refer to a particular minute and hour. These are then synchronized to the time zone in each venue where it is presented.

For instance, the bitter flashback in “Casablanca” of Rick (Humphrey Bogart) waiting like a fool in the rain with Sam (Dooley Wilson) for Ilsa (Ingrid Bergman), so the trio could flee the Nazi occupation of Paris, includes a shot of a clock on the train platform that reads 4:56. The audience for “The Clock” watches this scene, too, at exactly 4:56 p.m.

Every minute of the 24-hour video is constructed with this same precision so that we experience it as a cinephile’s mix-tape as well as a working chronometer. There is no need to check your watch during a screening; it tells you the correct time outside the walls, day or night.

Art audiences have been enthralled by “The Clock,” even though few have seen the work in its entirety. Crowds lined up around the block when it was shown this spring at the Paula Cooper Gallery in New York. The Los Angeles County Museum of Art had a similar response this summer. (Mr. Marclay made an edition of six along with two artist proofs; the Museum of Modern Art just announced that it has purchased one of these copies.)

Over the weekend of Sept. 16-18, the Museum of Fine Arts in Boston, which co-owns its copy with the National Gallery of Canada, had three special 24-hour screenings and will also be featuring the work synchronized to its normal hours through Oct. 10. There will be one final 24-hour showing on Oct. 9. It was here that I sat through more than seven hours—from 3:45 p.m. to 8 p.m. on a Friday and from 9 a.m. to noon on a Saturday. (This was a longer commitment than the typical MFA attendees I shared sofas with, most of whom walked out after less than an hour.)

Having viewed less than one-third of the whole, I’m reluctant to pronounce “The Clock” a masterpiece, as other critics have done. But from my sample I feel safe in making a few generalizations about what it does and doesn’t achieve.

Among its many virtues is the way it demonstrates (and embodies) the unique qualities of film and video as linear and temporal forms of art. The duration of a projected image is as basic to its “nature” as the substance (celluloid, tape, computer chip) on which it’s imprinted. A movie’s “running time” is essential to its being. Mr. Marclay has used this structural element to build an ingenious and self-reflexive mechanism.

“The Clock” instructs as it entertains. Only after several hours did I realize how much anxiety about time permeates the movie experience and modernity itself. The numerous panicky characters consulting their watches may be due to lazy screenwriters and directors, who rely on this cutaway shot to inject urgency into a plot.

But the prevalence of such scenes suggests the motif may have a deeper meaning. The industrial age was the first to put time in harness, and Mr. Marclay amply documents that. The dread of forgetting to be somewhere, of arriving late to school or the office, was a common 20th-century nightmare. Clocks are omnipresent in cinematic depictions of railroad stations, banks, airports, public-school classrooms, typing pools and in factories where workers punch time cards.

Except for Quasimodo (Charles Laughton) ringing the noontime bells in “The Hunchback of Notre Dame,” there are almost no snippets here portraying the Middle Ages, and only a few westerns. Several hourglasses make guest appearances as symbols of the era long before ours.

A surprising number of scenes express rebellion against time’s dictates, whether it’s the foster child (Michel Terrazon) in “L’enfance nue” who bangs his new wristwatch against the toilet, or Roy Hobbs (Robert Redford) in “The Natural,” the tragic hero whose mammoth homerun smashes the scoreboard clock at 4:41 p.m. and expresses a wish to transcend time, if not destroy it altogether.

There is hardly a minute in “The Clock” that is not laden with some kind of worry. The hours from 9 a.m. to noon show characters enjoying leisurely breakfasts and wake-up sex. But, at least in the history of American, English and French film, mornings are also the time for funerals, bank heists and prison executions. In “I Want to Live!” Barbara Graham (Susan Hayward) dies in the gas chamber at 11:37 a.m.

“The Clock” is both a triumph of digital editing and of “fair use” copyright law. It cost Mr. Marclay two years and a crippling injury to his mouse-clicking hands to assemble these clips. But at least he did not have to pay for them. Only the art world could reward this kind of obsession. Any commercial theater showing a movie with a running time of 24 hours would soon be out of business.

The piece has affinities with “Artist” (2000), Tracey Moffatt’s droll compilation of the clichés that film and television have relied on when portraying the lives of painters and sculptors. Neither work demands much of its audience except that we sit back and wait to identify a beloved actor in a half-remembered part. A strong backside, not a background in cinema studies, is the key to comprehending Mr. Marclay’s video in its totality.

“The Clock” further strengthens Mr. Marclay’s philosophic ties to John Cage. Both began as musicians and then extended their reach into other arts. Time is the prime material out of which their work is fashioned. Cage’s “Organ2/ASLSP (As SLow aS Possible)” a solo piece for organ designed to be played over centuries in the Church of St. Burchardi in Haberstadt, Germany—the latest version is not supposed to end until the year 2640—stands behind Mr. Marclay’s marathon project.

The popularity of “The Clock” should not be held against its creator. Mr. Marclay has taken one of the most objective measurements humans have ever devised, one that now strictly governs our working lives, and found poetry and mystery inside hard numbers.

Each hour of “The Clock” has a unique rhythm. I am eager to go back and sit through midnight to 5 a.m., times that have already become audience favorites. What’s not to like about a movie where the star, turning up more often than Cary Grant or Liv Ullman, is Big Ben? Viewing it for 15 minutes or 15 hours is time profitably spent.

Mr. Woodward is an arts critic in New York.

By CLARE ANSBERRY

(See Corrections & Amplifications item below.)

Associated Press

Many U.S. executives are optimistic sales will increase next year, but believe that their staffing levels will remain the same. Above, workers at a Caterpillar plant.

Corporate America is emerging from the worst downturn since the Great Depression smaller and thriftier.

To survive, companies have laid off millions of workers, closed hundreds of factories and vacated acres of office space. Like those who grew up in the Depression and still reuse sheets of aluminum foil, the experience has left them financially conservative and wary of risk.

The road to recovery will likely be marked by slow and steady acceleration, rather than speed. Some companies will see opportunities to amass undervalued assets or steal customers. But it is unclear if their efforts will create enough new jobs to spark broader economic growth.

Though appliance sales are expected to rise for the first time in four years, Whirlpool Corp., which closed about a tenth of its production capacity in 2009, says it will continue cutting costs and paring capacity this year. It plans to close its Evansville, Ind., plant that made refrigerators and ice makers, shifting some output to Mexico.

The appliance maker will also hold on to its cash. “Given the amount of uncertainty that remains across the globe, we will carry a high cash balance over the course of the year, and we think that is appropriate,” says Chief Executive Jeff Fettig.

Nearly every American industry ended last year in better shape than it started. Among the 95% of companies in the Standard and Poor’s 500-stock index that have reported fourth-quarter results, the majority beat market forecasts. But in many cases their improved performances were driven more by cost cutting than revenue growth. With the economy growing again, many CEOs expect broader revenue gains this year.

AP

Already corporate spending on technology has started to rebound. Computer-chip giant Intel Corp., considered a bellwether for the tech industry, had one of its most profitable quarters ever in the fourth quarter as sales rose 28%. The company, which a year ago announced that it would close several older factories as the economy slumped, displacing 5,000 to 6,000 workers, is investing billions of dollars in its U.S. plants as demand for consumer and business computers recovers.

The auto industry, which tanked in 2008, taking a sizable chunk of the economy with it, is starting to see some life, and the pickup is filtering down to its suppliers. Alexander “Sandy” Cutler, CEO of Eaton Corp., said the company’s truck and auto-related businesses, typically among the first to respond to an economic recovery, are seeing growth in both volume and profitability, and the company is carrying a hefty backlog. “That gives us a good feeling early in the year,” he says.

Stilll, Mr. Cutler, whose salaried U.S. workers were required to take four weeks of unpaid leave last year, says he doesn’t see broad economic growth until 2011. For now, Eaton can make due with overtime and temporary workers, rather than permanent new hires.

Retailers ended 2009 on a high note, as did delivery companies, as consumers lost some of their skittishness. Industries driven by capital spending, such as data processing, machinery and heavy-equipment manufacturing, are beginning to benefit from looser corporate purse strings as well as public-works spending in China, India and Brazil. Manufacturing output grew at a 20% annualized rate in the fourth quarter and the sector, which has shed 2.2 million jobs since 2007, added jobs in January for the first time in nearly three years.

“Compared to last year, this environment is like day and night,” says Klaus Kleinfeld, president and CEO of Alcoa Inc., which bolstered its cash holdings in 2009 in part by pressing customers to pay their outstanding balances. Mr. Kleinfeld is projecting 10% growth in the market for aluminum, half of which is coming from China. “If you ask the doomsayers, they say ‘Yeah, but that growth rate is compared to a very bad 2009.’ It’s all a matter of perspective.”

Some industries, such as aerospace and commercial construction, continue to lag. Hampered by continued instability in the housing market and uncertainty about infrastructure projects, the construction-machinery business was expected to end 2009 with an overall 43% drop in sales, according to the Association of Equipment Manufacturers, a Washington trade group.

“I think there is a lot of lingering gloom,” says Don Washkewicz, chairman and CEO of Parker Hannifin Corp., which supplies hydraulic parts to several industries. A case in point: on Jan. 19, when the company reported quarterly earnings that nearly doubled market expectations and raised its forecast of profit from continuing operations by 44%, its stock, after an initial uptick, ended the day lower than it started.

Much of the uncertainty in markets and boardrooms can be traced to jobs, the economy’s big wild card. One out of four of the 8.4 million American jobs lost during the recession isn’t expected to come back, leaving it up to growing industries to fill the void. In January, on the same day United Parcel Service Inc., the world’s largest package handler by volume, projected better-than-expected fourth-quarter earnings, it also said it would eliminate 1,800 management and administrative jobs.

Having cut jobs and capacity, streamlined production, distribution and logistics, many companies like their slimmer look. “We have put the genie back in the bottle, and I’m not ready to let it out,” says Parker Hannifin’s Mr. Washkewicz.

Indeed, while some employers have added modestly to their payrolls, the absence of broader hiring remains a problem for the nation’s economy, which depends on consumer spending.

More than 60% of the 1,000 chief executives surveyed by YPO Global, a network of 17,000 executives, expect their work forces to be the same a year from now. About 30% see an increase and 7% a decrease.

Rather than hiring or adding capacity, some companies hope to use their accumulated cash to make bargain-priced acquisitions. Eaton, which has been on the sidelines for the past year, is looking for opportunities, says Mr. Cutler, its CEO.

Other companies are positioning themselves in different ways. Heavy-equipment maker Caterpillar is preparing for the recovery by making sure its supply chain is ready to pick up pace quickly and smoothly. “Our ability to ramp up is really a function of how well we manage the supply chain and suppliers,” CEO Jim Owen told investors recently. “We’re way out in front compared to any previous cycle I know of in getting ready for that eventuality.”

Headwaters MB, a Denver investment bank, is coming out of the recession with a new gameplan. Dave Maney, chairman and co-founder, says the board met in the fall of 2008 and gave senior management carte blanche to ensure the company’s survival. As a result, Headwaters laid off all but seven key employees, and invited the others to form independent member firms. Using its contacts to drum up business, Headwaters directed transactions to those firms, keeping a cut for itself.

The restructuring drastically reduced fixed costs and also freed management to do more marketing, rather than day-to-day investment-banking transactions. “It was a good strategy for us and positioned us for the future,” Mr. Maney says.

Headwaters expects to add more independent firms by the end of the first quarter and be back up to its pre-recession head count of 42, including its own full-time employees and those working at its new affiliates.

Write to Clare Ansberry at clare.ansberry@wsj.com

Corrections & Amplifications

Some of the former employees at Headwaters MB, a Denver investment bank, left of their own accord. This article incorrectly said Headwaters laid off all but seven key employees.